The borrower may choose between two interest calculations options: 30/360 and Actual/360. The 30/360 method assumes every month has 30 days and each year has 360 days. The 30/360 calculation is listed on standard loan constant charts and is typically used by a calculator or computer in determining mortgage payments.

The Actual/360 method calls for the borrower to pay interest for the actual number of days in a month. This effectively means that the borrower is paying interest for 5 or 6 additional days a year as compared to the 30/360 interest rate basis. Spreads and rates on Actual/360 transactions are typically lower, currently by about 9 basis points. Since monthly loan payments are the same for both methods and since the investor is being paid for an additional 5 or 6 days of interest with the Actual/360 year base, the loan’s principal is reduced at a slightly lower rate. This leaves the loan balance 1-2% higher than a 30/360 10-year loan with the same payment.

Fannie Mae's early rate lock offers borrowers the ability to lock in an interest rate during the earliest stages of underwriting, as early as 7 days after receipt of the due diligence information and as long as 12 months before the loan actually closes. There's flexibility to increase the loan amount after final underwriting, there's no review by Fannie Mae prior to rate lock, and the pricing is competitive with all other Fannie Mae executions. Eligibility: Early Rate Lock may be used with all fixed rate Fannie Mae products for conventional multifamily properties. Large Loans ($25 million or more), seniors housing, student housing, MHC, and affordable housing loans require Fannie Mae approval.

Loan term/amortization: All loan terms are eligible. Up to 30 year amortization or Interest Only.

Commitment period: Up to 12 months (standard). Up to 18 months (choice refinance).

Commitment fee: 2-3% (refundable at closing) (for a commitment periods over 90 days and a choice refinance, this is reduced to 2%.)

Prepayment options for fixed rate loans include defeasance, declining fixed percentages and two yield maintenance options. For adjustable rate mortgages, a 1% and a declining fixed percentage schedule are available.

Under defeasance, rather than prepaying the mortgage, the borrower obtains a release of the lien on the property by purchasing a single Fannie Mae bond with cash flows identical to those of the mortgage and then pledging the bond as substitute collateral for the loan.

Because Fannie Mae defeasance can be accomplished with the purchase of a single bond, it can be much easier and less costly for the borrower than defeasance accomplished by purchasing a series of Treasury or other government securities.

Defeasance is available for fixed-rate loans with terms of 10.5 years or less, including cash loans in MBS or REMICs. A loan may not be defeased during the first three years from origination or within the first two years after being added to a REMIC.

Yield maintenance is a prepayment premium that allows the investor to attain the same yield as if the borrower had made all scheduled payments until the end of the specified Yield Maintenance period. Yield maintenance premiums are designed to make investors indifferent to prepayment by the borrower.

The Yield maintenance prepayment premium is calculated as the greater of: a) 1% of the unpaid principal between the mortgage note rate and the yield on a reference Treasury security designed in the loan document. The present value, discounted by the yield on the reference Treasury, is calculated to the end of the Yield maintenance period rather than to maturity.

Prepayments made after the expiration of the Yield maintenance period, but before 3 months prior to loan maturity, are subject to a prepayment premium equal to 1% of the unpaid principal balance. No prepayment premium is charged during the 3 months prior to loan maturity.

Yield maintenance can be used in conjunction with any fixed –rate loan in a cash MBS execution. Yield maintenance is not used in conjunction with adjustable rate loans.

Fixed percentage prepayment options for fixed rate loans are based on a declining schedule that starts at 5% and declines, over the term of the loan, to 1% This option is priced 10 basis points higher than Yield Maintenance or the Extended Maturity Product.

For adjustable rate loans, a borrower can choose between a declining schedule (with a 1% minimum) and a fixed 1% prepayment option. The 1% prepayment option is priced 10 basis points higher than the declining option, allowing prepayment flexibility at a nominal cost.

• LTV and DSC commensurate with the applicable product type and maturity, typically 80% LTV and 1.25X DSC
• Up to 30-year amortization
• Streamlined underwriting
• Reduced fees
• Available after 1 year
• Up to 3 supplemental loans available (1 must be associated with a sale)
• Fixed or floating interest rates
• Non-coterminous or coterminous maturities
• Minimum of 5-year term
• Competitive pricing
• $500,000 minimum loan amount
• Origination fee is 1% of loan amount ($5,000 minimum)
• Appraisals are no longer required on supplemental loan transactions that have an LTV of 70% or less, a combined DSCR of 1.30x or higher, and if the first lien has been in the lender's portfolio for at least 3 years.